TMI Blog1999 (4) TMI 157X X X X Extracts X X X X X X X X Extracts X X X X ..... ior to 1-3-1983, components used as original equipment parts (except bearings, bolts, screws, tools etc.) were wholly exempt from payment of duty vide Notification 167/79, dated 19-4-1979 and No. 249/82, dated 1-11-1982. The appellants standardised more than 600 out of 700 components used in their tractors and procured most of the components without payment of duty for fitment in the exempted and dutiable varieties of tractors. With effect from 1-3-1986, the benefit of exemption to components used in their manufacture of tractors was withdrawn; the exemption for tractors of below 25 HP continued. The benefit of Modvat Scheme which was introduced on 1-3-1986 in respect of components was not available if such components were fitted in the exe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the exempted variety of tractors and taking Modvat credit of duty paid, irrespective of their use, in respect of components/parts purchased from units other than SSI units in view of Notification 239/86. The appellants were informed under cover of letter dated 17-4-1986 that their above request was being forwarded to the CBEC for consideration and thereafter, the appellants followed the procedure set out in the letter dated 11-4-1986 and filed monthly RT 12 returns accordingly. The appellants were informed by letter dated 1-10-1986 that permission for allowing utilisation of credit of duty paid on inputs used in the manufacture of exempted tractors had been refused, and therefore, they made a representation to the CBEC once again requesti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also a fact that according to the provisions of Rule 57C of the Central Excise Rules, no such credit is admissible if the final products are fully exempt from duty. Therefore, the demand for reversal of Modvat credit is sustainable, in the light of the Apex Court judgment in the case of Chandrapur Magnet Wires Pvt Ltd. [1996 (81) E.L.T. 3 (S.C.)]. The same view has been taken by the Larger Bench of the Tribunal in the case of Kirlosker Oil Engines Ltd. reported in 1994 (73) E.L.T. 835 which view has been followed in the case of JCT Ltd. v. Collector of Central Excise, Chandigarh [1998 (99) E.L.T. 393]. The appellants submission is that once credit is taken under the Modvat Scheme, the inputs are deemed to be manufactured by the appellants ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e appellants were entitled to refund of duty paid on light diesel oil consigned to L-6 license holder through IOC which claim had been rejected by the Revenue authorities on the ground that the assessee had not followed the procedure set out in Chapter X of the Central Excise Rules. In the second decision relied upon by the learned Counsel, namely Union Carbide, the Tribunal held that Department had refused permission to the appellants to bring propylene required for setting up their petro-chemical plant without payment of duty under Chapter X Procedure and therefore, the condition of following of Chapter X procedure under Notification 276/67 was impossible to comply with, because of the action of the Revenue and such a condition should b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... components admittedly used in the manufacture of exempted tractors, by applying the provisions of Rule 57C. The issue before us is not the eligibility to exemption in terms of Notification 239/86 to components used in the manufacture of exempted tractors. The case is also not one of impossibility of complying with the requirement of reversing credit of duty availed on inputs used in the manufacture of exempted tractors, as there was no such restriction or prohibition upon the appellants. It was only a case of difficulty expressed by the appellants of segregation of components used in the manufacture of both dutiable and exempted varieties of tractors. Further, there is no claim pending for refund of duty paid on components used in the manu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on components/inputs used in the manufacture of exempted variety of tractors was being made since April 1986, and it is also not denied that the credit so availed was not utilised by the appellants for payment of duty on other dutiable goods. Therefore, we uphold the duty demand. Penalty is also warranted for contravention of the relevant Central Excise Rules in availing credit of duty paid on inputs used in the manufacture of exempted final products, in spite of denial of permission to do so, as seen from letter dated 1-10-1986 communicating the decision of the Collector of rejection of request for allowing of utilisation of credit of duty paid on inputs used in the manufacture of exempted tractors - the appellants cannot take shelter und ..... X X X X Extracts X X X X X X X X Extracts X X X X
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